Condominium developers begin shift towards local market

It is no secret that Cambodia’s condominium market has largely focused on attracting international developers and investors looking to jump into a growing market by offering expensive upscale units, but, as the standard of living in Cambodia is on the rise, many projects are shifting their focus to the local market through more reasonable prices.

Chrek Soknim, CEO of Century 21 Mekong, confirmed that currently only 20 per cent of the condominium market focuses on locals, while the other 80 per cent focuses on wealthy foreigners. He said of that 80 per cent, the starting price for a condominium averages at around $140,000, far above the investment capacity of most local investors.

According to the new report released by Century21, Cambodia’s condominium market supply has been producing between 30 to 40 per cent more than consumer market need.

At this pace, if the market relies primarily on foreign investors purchasing and renting these units, many experts have predicted that the oversupply could cause property prices to become stagnant if occupancy rates remain low.

Chrek added that a new trend is emerging as condominium developers start to focus on local consumer needs, pricing their condos from about $30,000 to $80,000 per unit, a reachable target for locals, he explained.

“As of now, there are four to six condominium project developers targeting local people, and ten projects are under market study,” he said, adding that in the next three to five years, there will not be a lot of options for living in the city except for condominiums.

Chrek continued that for locals, the condominium market costs anywhere from $900 to $1,500 per square metre. He said that this allows investors to possibly benefit by 15 to 20 per cent on resale providing market trends continue and prices increase. He added that some investors will likely opt to rent out the condominiums to ensure a steady return.

However, Sing Bunna, CEO of Bunna Realty Group, said that if the city and suburbs continue progressing properly and according to the population and size of the city, locals may not have an issue with where to live, thus choosing to opt out of living in the high-rise condominiums altogether.

Ann Sothida, associate director of CBRE Cambodia, said that the market potential for locals is larger than that for foreigners, so investors could benefit from preparing their spaces for locals instead. Recently, some local and international investments have already started construction for lower-priced condominiums.

“If someone develops their condo project with unit prices around $30,000 to $40,000, local people will be able to reach that segment because the average [local] 30- to 40-year-old can earn around $500 to $700 a month, and they may be interested in [renting] a condominium.”

For example, PS Crystal, a condominium project slated to be completed by 2018, has been selling their units between $875 and $1,000 per square metre.

Khan Chankolet, marketing manager and sales of PS Crystal condominium project, said that this is the first time that the company has focused on setting a reasonable price that both locals and foreigners can afford.

The Singaporean style project has sold 65 per cent of sales since it was initially announced, with 40 per cent of investors being locals.

“We’re surprised that PS Crystal has so much more support from our local people than what we planned,” he said.